New depreciation incentives offered to businesses in China

On 24^th September, PRC Premier Li Keqiang chaired a State Council executive meeting, he urged the deployment of accelerated depreciation policy of fixed assets to promote business technological transformation and support SME innovation. He decided to further open domestic express delivery market, and promote fair and orderly competition among foreign and local businesses. 

In relation to the new depreciation policy, the meeting decisions are:

1. Any machines and equipments acquired for R&D purposes after 1 Jan 2014 and the value is less than RMB 1 million can be written off immediately; For those asset valued above RMB 1 million, enterprises can choose to depreciate the assets by either using a 60% estimated life method or double diminishing value method to expedite depreciation.
2. New assets acquired within RMB 5000 can be written off as one off deduction in the year of acquisition by all the enterprises.
3. Enterprises in the industries of Biopharmaceutical Manufacturing, Special Equipment Manufacturing, Railway, Marine and Other conveying equipment Manufacturing, IT, Telecom, Computer, Instrumentation can either use a 60% estimated life method or double diminishing value method to expedite depreciation on any newly acquired fixed assets in order to further expand the high technology products importation into China.

国务院总理李克强9月24日主持召开国务院常务会议，部署完善固定资产加速折旧政策、促进企业技术改造、支持中小企业创业创新，决定进一步开放国内快递市场、推动内外资公平有序竞争。

关于部署完善固定资产加速折旧政策，会议决定如下：

　　■所有行业企业2014年1月1日后新购进用于研发的仪器、设备，单位价值不超过100万元的，允许一次性计入当期成本费用在税前扣除；超过100万元的，可按60%比例缩短折旧年限，或采取双倍余额递减等方法加速折旧。

　　■所有行业企业持有的单位价值不超过5000元的固定资产，允许一次性计入当期成本费用在税前扣除。

　　■生物药品制造业，专用设备制造业，铁路、船舶、航空航天和其他运输设备制造业，计算机、通信和其他电子设备制造业，仪器仪表制造业，信息传输、软件和信息技术服务业等行业企业，2014年1月1日后新购进的固定资产，允许按规定年限的60%缩短折旧年限，或采取双倍余额递减等加速折旧方法，促进扩大高技术产品进口。

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